Sino-Forest shareholders turn to Joe Groia

Sino-Forest shareholders turn to Joe Groia to make themselves heard

Retail investors holding shares of Sino-Forest Corp. have turned to veteran securities lawyer Joe Groia to try to get a voice for themselves and wring some value from the insolvent Chinese forestry firm.

Mr. Groia has not agreed to act in an official capacity yet, but he is doing some pro bono investigative work to see if there is a strategy he can pursue on behalf of shareholders.

“For me to say we have a gameplan would be putting the cart before the horse at this stage,” he said in an interview. “I’m not altogether sure there’s a lot that can be done. But we want to look carefully at potential sources of recovery.”

Ever since short seller Muddy Waters LLC published a report accusing Sino-Forest of fraud last year, the retail shareholders have been furious about how the process played out. They believe the Ontario Securities Commission over-reacted when it halted the stock, and that they are being wrongly shoved aside as the CCAA process plays out.

Shareholders were initially told they might receive a portion of the new company that would emerge from Sino’s restructuring transaction, but that is no longer the case. They were also removed from the litigation trust that was set up to pursue a lawsuit against Muddy Waters. They were originally supposed to receive as much as 100% of it.

Mr. Groia referred to the shareholders’ plight as a “very complicated situation.”

“You could turn this into a very good law school examination question. It’s not something that’s going to have a quick and easy solution.”

Mr. Groia is best known for his successful defence of Bre-X geologist John Felderhof. The Law Society of Upper Canada recently said that he violated civility rules during that trial.